“There’s a differential. So inversions, a lot of these deals may be more a function of regulatory and tax policy than they are maybe of anything else”, said Stephen Wood, Chief Market Strategist with Russell Investments.
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Due to his rapid ascent and moves, Saunders has not presided over start-to-finish development of a drug, a process that can take 12 years or longer. “If the inversions become harder and the tax savings still make sense they’ll just do it as an out-and-out acquisition”, Harding said. While merged companies tend to focus on cutting duplication, Pfizer and Allergan have distinct drug portfolios – Pfizer with drugs including Viagra and Lipitor and Allergan, which makes Botox – and so not much overlap, said Mahmud Hassan, a finance and economics professor at Rutgers University, who specializes in the pharmaceutical industry.
The deal is a victory for Mr Read, who in 2014 sought an inversion transaction with AstraZeneca, but was repeatedly rebuffed by the British company, which said Pfizer had undervalued its business. Allergan, a New Jersey company, has a Dublin, Ireland address for the sole objective of avoiding US taxes.
Pfizer paid $68 billion for Madison-based Wyeth in 2009, and Merck & Co. merged with Schering-Plough the same year in a transaction valued at $41.1 billion.
“The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better”, Saunders said.
“We can not continue to allow Pfizer and other corporations to pretend that they are American while reaping the benefits this country has to offer, yet claiming to be another nationality when the tax bill comes, Congresswoman Rosa DeLauro, D-Conn, said Monday”.
How can the inversion move forward if the Treasury has introduced rules to deter companies from using the tax strategy? . The thinking is that excess cashflow will leave it plenty of scope for buybacks considerably more ambitious than the $5 billion exercise already pencilled in by Pfizer ahead of the merger. Equities analysts forecast that Allergan will post $15.45 EPS for the current year. Pfizer’s shares had fallen 9.2 percent.
Read expressed confidence the deal will pass muster with U.S. regulators. Moreover, Allergan, which generates 85 percent of its business in the US, will have a “huge opportunity for future growth” by being able to piggyback on Pfizer’s global commercial infrastructure. The companies expect that shares of the combined company will be listed on the NY Stock Exchange and trade under the “PFE” ticker. Pfizer shareholders would control about 56 percent of the joint entity.
What might frustrate investors too is Pfizer’s declaration today that a spin-off deal wouldn’t happen before 2018.
“Some of the Indian companies like Glenmark and Sun Pharmaceuticals are attempting to buy a few of the drug brands from Allergan”.
What about Pfizer’s potential split? According to securities filings, Pfizer hasn’t reported a pretax profit in the US since 2007.
The companies estimated the merger would increase earnings per share 10%, excluding special items, in 2019 and add by a high-teens percentage rate in 2020.
For its part, Pfizer has been an assiduous, if not always the most successful, developer of drugs through its own research and development team.
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In the past, Pfizer’s mergers have taken a heavy toll on CT, sometimes unfolding over years. “It shouldn’t have much of an impact one way or the other on New Jersey”.
